Commercial real estate loans killed Gulf State Community Bank, just as they had a lethal effect on so many other Florida banks.
About 35 percent of the bank's loans were made to developers of office buildings, shopping plazas and housing developments by 2008,
according to state regulators.
These large loans struck banks particularly hard after the real estate boom, leading to millions in losses.
But bad luck also played a role at Gulf State.
Regulators reported in May 2008 that $1.3 million in loans to a Franklin County investor were in danger of going bad because of Hurricane Katrina.
The report said the borrower started investing in real estate in the Carabelle area of the Panhandle. But he shifted his attention to buying, refurbishing and selling older homes in New Orleans and coastal areas of Louisiana and Mississippi just before Katrina struck in 2005.
The borrower's "insurance claims were denied and remain unpaid," regulators wrote in their report. "The loss has resulted in a considerable reduction in his personal net worth and liquidity."
Interviewed by The Apalachicola & Carabelle Times in January 2010, Gulf State chief executive Cliff Butler said he'd never seen a recession like the one that hit the state in 2007.
"We're into our fourth year of trying economic times for our customers," Butler said. "I'm having to deal with things I've never seen in 30 years of banking experience."